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The National Debt Is Congress’s Fault! Redux

The national debt exists today because when the nation went off the Gold Standard in 1971 and adopted its present non-convertible fiat currency system, Congress did not repeal its mandate requiring that the Government back all its deficit spending with already existing borrowed dollars whose convertibility was covered by our holdings of Gold. This Congressional mandate to borrow funds by issuing debt instruments, has caused the national debt to persist. Had Congress repealed it when President Nixon took the country off the Gold Standard, and had we ceased to issue debt at that time, then the Government would have re-paid all of our 1971 debts as they came due, and our national debt today, as well as our debt-to-GDP would both now be at Zero. So, the existence of the National Debt today is Congress’s fault!

The national debt is a political problem created by Congress’s inaction. It magnifies the political strength of conservatives and weakens progressives because it makes people afraid to deficit spend, since then the country will be “increasing its debt,” and increasing “the burden on our grandchildren.”

Congress needs to repeal the mandate forcing the Government to issue debt instruments on a dollar for dollar basis with deficit spending, right now.

Both Congressmen and Senators should quit their whining and grousing about deficits and the national debt, since it is their lack of action that is translating deficit spending into more public debt. It doesn’t have to be that way. As the creator of its own currency, the United States can just spend without issuing debt, and that new spending can include paying off its outstanding Treasury Bonds as they come due until that national debt is gone.

The United States has many very real problems. But the national debt is not one of them. The deficit spending required to solve our problems shouldn’t be constrained by that fantasy problem, or the fantasy solution of stabilizing a debt-to-GDP ratio. To make sure that it’s not, Congress needs to repeal its debt issuance mandate now, before the American people learn that Congress, itself, is responsible for its existence, and that they are the ones to blame for both the debt and their own phony deficit hysteria.

(Cross-posted at All Life Is Problem Solving and Fiscal Sustainability).

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Joseph M. Firestone, Ph.D. is Managing Director, CEO of the Knowledge Management Consortium International (KMCI), and Director and co-Instructor of KMCI’s CKIM Certificate program, as well as Director of KMCI’s synchronous, real-time Distance Learning Program. He is also CKO of Executive Information Systems, Inc. a Knowledge and Information Management Consultancy.

Joe is author or co-author of more than 150 articles, white papers, and reports, as well as the following book-length publications: Knowledge Management and Risk Management; A Business Fable, UK: Ark Group, 2008, Risk Intelligence Metrics: An Adaptive Metrics Center Industry Report, Wilmington, DE: KMCI Online Press, 2006, “Has Knowledge management been Done,” Special Issue of The Learning Organization: An International Journal, 12, no. 2, April, 2005, Enterprise Information Portals and Knowledge Management, Burlington, MA: KMCI Press/Butterworth-Heinemann, 2003; Key Issues in The New Knowledge Management, Burlington, MA: KMCI Press/Butterworth-Heinemann, 2003, and Excerpt # 1 from The Open Enterprise, Wilmington, DE: KMCI Online Press, 2003.

Joe is also developer of the web sites www.dkms.com, www.kmci.org, www.adaptivemetricscenter.com, and the blog “All Life is Problem Solving” at http://radio.weblogs.com/0135950, and http://www.kmci.org/alllifeisproblemsolving. He has taught Political Science at the Graduate and Undergraduate Levels, and has a BA from Cornell University in Government, and MA and Ph.D. degrees in Comparative Politics and International Relations from Michigan State University.

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